MSE News: State pension to rise by at least 2.5% next April

neilvw

zagfles wrote: »

The stupid, and purely political, part of the triple lock is the 2.5% minimum. The only reason for it is to avoid "peanuts" headlines in the Sun when inflation is low, and so the rise is only enough to buy a bag of peanuts!

The thing brain-dead Sun readers don't seem to comprehend is that increases to the state pension aren't supposed to enable you to buy anything extra, even a bag of peanuts. They're supposed to keep your standard of living the same as last year by increasing the cash value to make up for cash being worth a bit less than this time last year.

But rather than the govt trying to explain this, they pandered to the idiots and set a 2.5% minimum. So when inflation is low, pensioners get a real terms rise, when it's high they don't. There's no logic whatsoever to that.

The compelling political logic derives from what Gordon Brown experienced when he increased the basic state pension by RPI (+1.1%, +75p) in April 2000.

zagfles

neilvw wrote: »

The compelling political logic derives from what Gordon Brown experienced when he increased the basic state pension by RPI (+1.1%, +75p) in April 2000.

Yes, the year of the "peanuts" headlines.

Democracy is flawed. We need a revolution

Chickereeeee

zagfles wrote: »

Who says it's not sustainable? We have one of the lowest state pensions in Europe...........
.....The stupid, and purely political, part of the triple lock is the 2.5% minimum. The only reason for it is to avoid "peanuts" headlines in the Sun when inflation is low, and so the rise is only enough to buy a bag of peanuts!

Or perhaps they are trying to close the gap with the rest of Europe?

N1AK

zagfles wrote: »

Who says it's not sustainable? We have one of the lowest state pensions in Europe, the pension age is being increased, and state pensions are (in general) being lowered by the new state pension replacing S2P. The Turner report recommended basically what we have now. The IFS haven't sounded alarm bells. They both analysed the figures, do you have a better analysis?

...The stupid, and purely political, part of the triple lock is the 2.5% minimum.

That stupid part is a essential part of the triple lock, otherwise it'd be a double lock.

As to your claim the IFS haven't sounded alarm bells...

Paul Johnson, director at the Institute for Fiscal Studies

Going forward, it will depend on the relativities between wages and inflation... It’s not something that’s sustainable forever.

Perhaps you should read what is said by people and organisations before claiming to know what they've said.

zagfles

N1AK wrote: »

That stupid part is a essential part of the triple lock, otherwise it'd be a double lock.

Why is it "essential" that the lock is a "triple" one :rotfl:

As to your claim the IFS haven't sounded alarm bells...

Paul Johnson, director at the Institute for Fiscal Studies



Perhaps you should read what is said by people and organisations before claiming to know what they've said.

And perhaps if you're going to quote them, give us a URL so we can see the full context instead of just a "quote" of one sentence.

Like this for instance:

http://www.ifs.org.uk/comms/r82.pdf

The proposed single tier pension represents a less generous state pension for almost everyone in the long run. Income at the SPA would be lower under the proposed system, and particularly so for those who contribute for longer, whether through paid employment, caring or receiving disability related benefits. Although the more generous indexation arrangements under the proposed system would narrow this gap through retirement, most people would have to live to beyond age 100 to be better off overall.

In the long run, the effect of the proposed reforms will be to reduce state pension income for most people. The reductions will be largest for higher earners. However, the system will become less expensive to the exchequer, easier to understand and more transparent.

The lower exchequer cost in the long run suggests that this reform may be longer lasting than the many others that have come before. The Office for Budget Responsibility’s long run fiscal projections last year suggested that further reforms would be needed at some point to reduce upward pressure on public spending (or increase additional tax revenues) in future. To the extent that the single tier reforms help to deliver this, they perhaps avoid some other policy that might also have been costly to these same cohorts.

Billopp

Not all a persons state pension will increase by 2.5%. It is only the basic state pension that will increase. This was mentioned in the article.

The article left off the vital information that state second pension/SERPS will not receive any increase as it only receives CPI which is below 0%. For a high earner this could be no increase on up to about £160 pw

This has a knock on affect to a persons contracted out pension known as Guaranteed Minimum (GMP) which will not receive any increase on the part known as pre 1988 GMP whichis paid with the state pension. The occupational scheme is only responsibility of paying the first 3% on post 1988 GMP and anything above 3% is paid with the state pension. So for most people they wont receive any increases on that either.

For a high earner that could mean no increase on up to about £160 pw as well as no increase on the rest of their occupational pension unles it has a built in minimum increase like the BBC pension scheme.

If you study the BBC pension booklet you will see that the scheme pays GMP increases as well as the members receiving it with the state pension when it is payable . So that means when there is a GMP increase they get it twice.